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REVIEW of FINANCE - Issue 4, 2021
on international assessment. If the dependency on banks' of individual investors were opened, which was much
credit increased and this ratio rose up in the context of higher than the previous four years combined. In
the COVID-19 epidemic, it would pose a warning of high November 2021, the stock market witnessed a trading
risks to the banking system and the macro balance as well. session of over VND 56,000 billion, 4 times higher
Just in the last 3 months of 2020, the credit growth has than the same period last year. By the end of the third
increased from 6% to over 20%, and the credit growth quarter of 2021, the margin loans of nearly 60 securities
in 2021 is forecasted to reach about 13%. In Viet Nam, companies amounted to approximately VND 154,000
economic growth depends quite a lot on credit capital, but billion, equivalent to an increase of 68% compared to the
due to the impact of the COVID-19 pandemic, economic end of 2020. This is a record high outstanding increase in
growth is declining. In the coming time, if the production the history of the market.
and business situation of enterprises is not recovered, the The growth of the real economy slowed down and
increase in credit will not bring about growth promotion even grew negative, while the stock market continued
effect, but leading to the increasing non-performing loans to increase. In fact, this is a shift in investment channels
of the bank, which can cause risks to financial security. in the context of business production and business
stagnation of enterprises, unstable jobs and incomes of

Despite the great impact of the COVID-19 people. All of them desire to find new income generating
pandemic, financial security in Viet Nam is still channels. The number of participants in the market is
guaranteed, macro and micro indicators are still in constantly increasing, pushing the indexes higher. If this
the safe corridor. The top goal and task set in the continues for a long time, while the real economy has not
coming time is to implement solutions to restore been improved, it may be a risk when the market goes
production and business of enterprises, renew down, there will be large fluctuations, affecting a large
trade and service channels, and at the same time number of small, new investors who do not have much
having measures to stimulate and adjust the experience in capital management, and financial security
movement of capital flows in a safe and healthy of the individual and household sectors as well.
direction, creating economic growth and ensuring Regarding the real estate market, recently, loans
financial security. from corporate bonds of real estate enterprises have

continuously increased. However, according to the
assessment of Ministry of Finance of Viet Nam, the debt
Normally, credit growth would be more than 2 times repayment capacity of most enterprises is weak and even
higher than GDP growth, however GDP growth of Viet very weak, and the level of financial leverage (Net Debt
Nam over the past two years was modest compared to to Equity ratio) is also at high level, especially for unlisted
credit growth. This shows that credit couldn’t go into companies at more than 8.1 and listed companies at more
normal production and business as in the pre-pandemic than 2.5. Besides, most of the security assets of bonds are
period, because many businesses' operations are real estate formed in the future or corporate shares - the
disrupted due to the impact of the COVID-19 epidemic. value of the collateral is affected by market movements.
Thus, a large amount of credit is flowing into potentially Facing that situation, on December 3rd, 2021, the
risky areas now. Ministry of Finance of Viet Nam sent a document to the
Facing that situation, the State Bank of Viet Nam State Securities Commission, Department of Banking and
issued Document No. 6561/NHNN-TTGSNH to credit Financial Institutions, Ministry Inspectorate of Finance
institutions and foreign bank branches on a number of General Department of Taxation, and Viet Nam Exchange
issues in credit activities. Accordingly, the State Bank of to promote inspection and supervision of corporate bond
Viet Nam specifically requires banks to strictly control issuance to minimize risks for investors. The Ministry of
the growth rate of credit balances and credit quality in Finance also recommends that investors should be very
areas with potential risks or bearing great impacts of the cautious and carefully evaluate risks before deciding to
COVID-19 epidemic, especially outstanding loans in the buy corporate bonds. The lesson from the Evergrande
real estate sector. Although the current non-performing debt bomb in China is a reminder for the development of
loan ratio of most commercial banks is within the an unhealthy and risky financial real estate model.
allowable threshold of less than 3%, it is still necessary to Increasing legal risks and financial crimes
be cautious according to the recommendation of the State
Bank of Viet Nam. Currently, with the development of technology,
Risks from stock market and real estate market including financial technology (Fintech), many new forms
and financial products such as peer-to-peer lending, online
While the economy was heavily affected by the lending, have not yet been regulated by institutions and
pandemic, the stock market has been growing hot policies. In the context of the epidemic, people's demand
recently in Viet Nam. According to statistics, in the first for loans increases, which will be a potential risk if not
10 months of 2021, more than 1 million new accounts monitored and managed in a timely manner.

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